1. EPA Basics on Clean Air Act Sec. 111(d) Reducing Carbon Emissions from Existing Power Plants NW Energy Coalition May 2, 2014

2. Reducing Carbon Pollution From Power Plants President’s Directive to EPA Under the Climate Action Plan: Reduce carbon pollution from power plants by setting Carbon Pollution Standards and Guidelines using the Clean Air Act Focus on these elements when developing the standards/guidelines – Engage stakeholders including States, leaders in the power sector, labor leaders, non-governmental organizations, consumer groups, tribal officials, members of the public – Focus on making the program flexible, including market-based instruments, performance standards, others – Tailor regulations and guidelines to reduce costs, including performance standards and market-based mechanisms – Recognize the continued importance of relying on a range of energy sources and cognizant of other regulations that affect the power sector 2

3. EPA’s Task Develop carbon pollution standards, regulations or guidelines, as appropriate, for: 1.New power plants 2.Modified and reconstructed power plants 3.Existing power plants 3

4. Clean Air Act Section 111 Lays out different approaches for new and existing sources – New sources under section 111(b)  Federal standards for new, modified and reconstructed sources  Proposal signed September 20, 2013  Draft – 1100lbs/MWh new coal, 1000lbs/MWh new gas  Public Comment Period extended until May 9, 2014 – Existing sources under section 111(d)  State programs for existing sources that are equivalent to federal guidelines 4

5. Section 111(d) is broad by design Section 111(d) is broad and allows for collaboration between EPA and states to address pollutants that endanger the public health and welfare. Section 111 (d) provides greater flexibility to EPA and states to design a program in consultation with diverse range of stakeholders – flexibility is driven by the recognition that existing sources do not have as much flexibility as new ones. EPA will issue guidelines for states to use in developing plans implementing standards of performance for the affected sources 5 Clean Air Act Section 111 (cont.)

6. . THE CLEAN AIR ACT AND EXISTING POWER PLANTS THE “101” ON 111 (d) “Source-based” approach limited to options plants can do “within the fenceline” (e.g. heat-rate improvements) – yields limited reductions, higher costs “System-based” approach includes all options that reduce emissions –yields deeper reductions, lower costs Heat-rate improvements Increasing zero -emission power (renewables) Increasing energy efficiency Shifting generation from coal to non-emitting resources “ Best System of Emission Reduction” 6

7. THE TIMELINE January 20 th End of President Obama's second term. 2017 January 20 th Start of President Obama's second term. June 25 th President Obama announces Climate Action Plan. September 20 th EPA proposes carbon pollution standards for future power plants. 2013 May 9 th End of public comment period for future power plant proposal. June 1 st EPA to propose guideline for carbon pollution standards for existing power plants. June-September Public comment period on existing power plant proposal. 2014 June 1 st EPA to finalize power plant carbon pollution standards. 2015 June 30 th States to submit implementation plans for existing power plants to EPA. July-DecemberEPA reviews state plans for compliance with its guideline. 2016 7